Fruit Fight Feared

December 23, 1998

It's tempting to just poke fun at this banana war brewing between the U.S. and the European Union: Yes, we have no banana policy. Peel this, EU!

After all, the U.S. doesn't even grow bananas and were it not for the politically well-connected urgings of Dole Food Co. and Carl Lindner's Chiquita Brands International, this might have remained an arcane trade dispute for another six years.

But the banana war is serious indeed. It raises the danger of an all-out trade war between the U.S. and Europe and threatens to make irrelevant the World Trade Organization.

And it shines a spotlight on the most intractable kind of trade disputes--those involving agricultural products. Even in prosperous times, arguments among nations over products arising from the land are difficult to resolve.

And with plummeting commodity prices, these are not prosperous times for farmers.

(Besides the incipient banana war, the U.S. is involved in trade skirmishes with Canada over wheat and with Japan over rice.)

The facts on bananas aren't in dispute. The EU admits it gives preferential treatment to bananas imported from former British and French colonies in Africa and the Caribbean.

Over six years, that policy has been challenged repeatedly by the U.S. on behalf of Chiquita and Dole and their cheaper bananas imported from Ecuador, Guatemala, Honduras, El Salvador and Nicaragua.

The WTO ruled for the U.S. and Europe pledged to amend its banana policy by Jan. 1.

Claiming the coming changes aren't enough, the U.S. now threatens to slap 100 percent tariffs on European products from cashmere to candles to coffee makers by February.

Washington rightly argues that the credibility of the WTO is at stake in this dispute. The EU has dragged its feet making the changes. If countries no longer believe the WTO can arbitrate trade disputes fairly and get results, they will give up on it, threatening the multilateral trading system on which the global economy depends.

The Europeans rightly accuse America of taking the law into its own hands, rather than continuing the tedious but necessary process of working for change through WTO channels.

The WTO needs to ensure that the EU actually delivers on its promises and the U.S. needs to ratchet down the rhetoric.